State Lawmakers in Talks to Lower Cap on Carbon Emissions

State lawmakers are in talks over a plan to lower New York’s cap on carbon emissions, a move that would likely boost costs for coal-fired power plants and revamp the state’s participation in a regional climate-change program.

Under pressure from environmental groups, lawmakers and Gov. Andrew Cuomo’s office have discussed lowering the limit through the Regional Greenhouse Gas Initiative, a nine-state cap-and-trade program in which carbon allowances are auctioned off to power producers.

That would increase the price of the credits at auction, and the added revenue to the state would partially be set aside to assist communities that see power plants close as a result, according to bill language drafted by Cuomo’s office and obtained by Gannett’s Albany Bureau.

“One of the most serious things that has been looked at this year is adjusting the cap, and by adjusting the cap the credits themselves will regain value,” said Assemblyman Kevin Cahill, a Kingston Democrat who chairs the chamber’s energy committee. “How serious it is, whether those negotiations have produced any results, that’s another question.”

Under the draft bill, the “Clean Energy and Economic Revitalization Act of 2012” would pair the greenhouse-gas cuts with hundreds of millions of dollars in long-term incentives for solar energy. The bill would also expand and clarify the state’s net-metering law, which allows consumers to produce solar power and claim credits on their energy bill.

The legislation would likely have a significant impact on the state’s coal plants, particularly financially troubled facilities in Lansing, Tompkins County, and three others in western New York. AES Corp. reached a deal earlier this year to sell plants in Lansing and Somerset, Niagara County, to bondholders as part of bankruptcy proceedings, and shuttered two others —including one in Broome County last year.

Coal plants often represent a significant portion of their respective community’s tax base and employment, an issue that led Senate Republicans to propose something of a bailout plan for the three western New York facilities earlier this year. Under the GOP proposal—which was rejected by Cuomo and Assembly Democrats as part of state budget negotiations—the New York Power Authority would have been required to purchase power from the plants for three years.

Current discussions, however, center around providing state aid to municipalities should a power plant close, according to the bill language. Forty percent of the additional revenue from the emissions auctions would be earmarked for communities that are “substantially adversely impacted by the loss of property tax revenues” or a payment in lieu of taxes agreement “due to the closing of a major electric generating facility.”

A spokesman for the Senate GOP could not immediately be reached for comment Sunday.